Disney earnings miss as higher costs weigh on bottom line
Walt Disney on Tuesday reported second-quarter earnings and revenue that missed Wall Street estimates amid higher costs and mixed results in its media networks business.
Disney’s cable networks, particularly ESPN, have come under pressure in recent quarters as more consumers opt for cheaper pay-TV packages and video streaming services such as Netflix. Disney launched ESPN+, a $4.99-a-month streaming service, in April to attract viewers looking for cheaper alternatives.
The media networks business – Disney’s largest by revenue – posted a 1% decline in operating income despite stronger revenue. An increase in operating income at ESPN was offset by a loss at BAMTech and weaker results for cable network Freeform, Disney said.
The company also reported a decline in operating income for its consumer products and interactive media business. Disney’s theme parks and resorts recorded stronger results, while the studio entertainment division saw higher operating income on 20% revenue growth.
The media giant reported overall net income of $2.92 billion, a 23% increase compared to the same quarter last year. On an adjusted basis, earnings came in at $1.87 per share, compared to a consensus estimate of $1.95.
Revenue grew 7% to $15.23 billion. Analysts were looking for $15.34 billion in revenue.
Expenses rose $97 million to $196 million due to costs related to Disney’s agreement to purchase certain assets from 21st Century Fox. The company also cited higher compensation costs.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DIS | THE WALT DISNEY CO. | 114.72 | +0.46 | +0.40% |
Disney’s second-quarter report comes after Comcast dropped its rival bid for 21st Century Fox’s entertainment assets, allowing Disney to move forward with a $71 billion acquisition. Fox and Disney shareholders approved the deal in June.
21st Century Fox is the parent company of FOX Business.
